Contract – Management agreement – Undue influence – Restraint of trade – Agency – Agent’s knowledge
Negotiations in relation to a management agreement were initially conducted between the Appellant’s solicitor and the Respondents’ solictors. The First Respondent then approached the Appellant directly. The Appellant signed the agreement put to him by the Respondent. This soon came to the knowledge of the Appellant’s solicitor, who considered the agreement to be unreasonably in restraint of trade, but who made no objection at the time, believing the Respondents to be the best prospect that the Appellant had of reviving his career. Later the Appellant and the Respondents fell out, and the Appellant refused to continue to be bound by the agreement. The Respondents brought an action for breach of contract. The Appellant defended this on the basis of restraint of trade and undue influence. The judge held that although both of these defences were made out, the Appellant had affirmed the contract.
Whether agreements that were unenforcable due to undue influence and restraint of trade could be rendered enforceable by a plea of estoppel or affirmation.
Estoppel and/or affirmation were both available in answer to an allegation that an agreement was unenforceable by reason of undue influence or unreasonable restraint of trade: Zang Tumb Tuum Records Ltd v Johnson [1993] EMLR 61 and Panayiotou and Others v Sony Music Entertainment (UK) Limited [1994] EMLR 229 applied.
The decision at first instance is also of interest because of its approach to the issues of undue influence and restraint of trade; including the justifiability of particular restrictions in recording agreements.